The structures of a series of complexes designed to mimic intermediates along the reaction coordinate for beta -galactosidase are presented. These complexes clarify and enhance previous proposals regarding the catalytic mechanism. The nucleophile, Glu537, is seen to covalently bind to the galactosyl moiety. Of the two potential acids, Mg2+ and Glu461, the latter is in better position to directly assist in leaving group departure, suggesting that the metal ion acts in a secondary role. A sodium ion plays, a part in substrate binding by directly ligating the galactosyl 6-hydroxyl. The proposed reaction coordinate involves the movement of the galactosyl moiety deep into the active site pocket. For those ligands that do bind dee ly there is an associated conformational change in which residues within loop 794-804 move up to 10 Angstrom closer to the site of binding. In some cases this can be inhibited by the binding of additional Ligands. The resulting restricted access to the intermediate helps to explain why allolactose, the natural inducer for the lac operon, is the preferred product of transglycosylation.